All you need to know about Pradhan Mantri Vaya Vandana Yojana (PMVVY)

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Pradhan Mantri Vaya Vandana Yojana (PMVVY) was launched in May 2017 to provide a long-term income option for senior citizens in the country. This assumes importance in the wake of the low-interest rate scenario we find ourselves in. Fixed deposits are getting renewed at lower rates. This poses problems to those senior citizens who rely on interest income to meet regular expenses.

LIC came out with a PMVVY product with a guaranteed interest rate of 8% for 10 years.

The PMVVY scheme was extended by the Government multiples times until March 31, 2020. The original PMVVY product expired on March 31, 2020. If you invested on or before March 31, 2020, you would have earned 8% p.a. for 10 years. Now, even though the Government has extended the product until March 31, 2023, it has made important changes to the PMVVY scheme. In this post, let’s find out.

Updates to Pradhan Mantri Vaya Vandana Yojana (May 20, 2020)

The erstwhile PMVVY (with 8% p.a. rate of interest) expired on March 31, 2020. The Government of India has extended the PMVVY scheme until March 31, 2023 with a few changes to interest rates. Govt. Press Release dated May 20, 2020)

Note this change does not affect investors who had invested on or before March 31, 2020. They will get 8% p.a. until the product maturity (10 years).

The change will apply to the new subscribers of PMVVY. If you apply in this financial year (April 1, 2020-March 31, 2021), you will earn 7.4% p.a. And you will earn this interest for the next 10 years.

Do note, even though the Government has extended the scheme until March 21, 2023, the Govt. will decide the interest rate every year (much like it does not small savings schemes every quarter). For FY2021, the interest rate is 7.4% p.a. For the next year, the rate could be different from 7.4% p.a. Thus, investors who invest in FY2022 may earn a different rate of return than 7.4%. Do note, if you invested in PMVVY in FY2021, you will continue to earn 7.4% p.a. for 10 years. Subsequent changes in the interest rate will not affect your returns. It is like a bank fixed deposit or a Senior Citizens Savings Scheme, where you lock-in the rate of interest until product maturity.

Additionally, the Government has specified that the interest rate for PMVVY will be along the lines of SCSS (interest rate of SCSS as on May 21, 2020: 7.4% p.a.). The rate of interest for PMVVY is further capped at 7.75% p.a. This cap will be revisited at regular intervals. Frankly, I don’t understand the need for a cap. As I see, PMVVY is now just like SCSS with 10-year maturity and interest rate lock-in.

The minimum monthly pension is Rs 1,000. The minimum annual pension is Rs 12,000. Owing to the reduction in interest rate (for investments made in FY2021), the minimum investment for a monthly pension of Rs 1,000 has gone up to 162,162 (earlier it was Rs 1.5 lacs). The minimum investment for an annual pension of Rs 12,000 has gone up to Rs 156,658 (earlier it was Rs 1.44 lacs. My calculations show it should be Rs 156,735).

Salient Features of Pradhan Mantri Vaya Vandana Yojana (PMVVY)

  1. Minimum Entry Age: 60 years (completed)
  2. Maximum Entry Age: No Limit
  3. Policy Term: 10 years
  4. You will be paid pension for 10 years
  5. You can choose pension payment frequency i.e. monthly, quarterly, half-yearly or annual
  6. Minimum Pension: Rs 1,000 per month, Rs 3,000 per quarter, Rs 6,000 per half year or Rs 12,000 per year
  7. Maximum Pension: Rs 5,000 per month, Rs 15,000 per quarter, Rs 30,000 per half year or Rs 60,000 per year Rs 10,000 per month, Rs 30,000 per quarter, Rs 60,000 per half year or Rs 1.2 lacs per year
  8. Since the interest rate is fixed at 8% p.a. 7.4% p.a. now, you can derive the minimum and maximum investment amounts from the minimum and maximum pension levels. You can use monthly compounding to calculate such amounts.

    The table below contains the minimum and maximum investment at 8% p.a. I have never been able to calculate the exact numbers here (not sure how LIC figures this out. They use different rates of interest for different payment frequency). Will update once LIC releases for 7.4% p.a. Do note, since the interest rate has gone down, you will need to invest a higher amount to get the same level of income.

    PMVYY Pradhan Mantri Vaya Vandana Yojana PMVVY minimum pension maximum pension

  9. The limit on maximum investment is per senior citizen (and not per family). Therefore, if your spouse is also a senior citizen, he/she can invest Rs 15 lacs in PMVVY too. Therefore, the two of you can invest a maximum of Rs 30 lacs in PMVVY scheme. Link to Government Press Release dated May 2, 2018
  10. The scheme is exempt from Goods and Services Tax (GST).
  11. With monthly compounding, the effective annual return is 8.3% p.a.
  12. This ceiling of pension is for the entire family. The total amount of pension under this policy to a family cannot exceed the maximum pension limits as mentioned above. The family includes self, spouse, and dependants.
  13. The scheme is open till May 3, 2018 March 31, 2020. Quite possible when the scheme is re-launched next year, the interest rate on offer may be quite different. (The previous statement has actually come true) Even though the scheme has been extended to March 31, 2023, the interest rate has been reduced to 7.4% p.a. for investments in FY2021. The interest may change again in FY2022 and FY2023.
  14. The amount of pension is not dependent on age. This is not the case with other pension plans or annuity plans.
  15. You can take a loan up to 75% of the purchase price after 3 years.
  16. There is no exclusion on account of suicide. The purchase price will be returned to the nominee even in case of suicide.

You can read about various product features in detail on LIC website.

PMVVY: Pension Payment, Death Benefit and Maturity Benefit

These are along expected lines.

The pension will be paid for a maximum of 10 years as per the payment frequency chosen.

In the event of the death of the policyholder during the policy term of 10 years, the purchase price shall be returned to the beneficiary.

In the event of survival till maturity, the purchase price along with the final pension installment shall be payable.

Premature Exit in PMVVY

The premature exit is allowed only if the pensioner needs money for the treatment of any terminal/critical illness of self or spouse. In case of such surrender, there will be a premature exit penalty of 2%. You will get back 98% of the purchase price.

Tax Benefit for Investment in Pradhan Mantri Vaya Vandana Yojana (PMVVY)

There is no tax benefit for investment in PMVVY.

How is Pension Income taxed?

Such pension income will be taxed at your marginal income tax rate.

There is no tax charged when the purchase price is returned at the time of maturity or death.

SCSS vs. PMVVY

When I think about PMVVY, one of the existing schemes that deserves attention is Senior Citizen Savings Scheme (SCSS).

PMVVY provides a guaranteed return of 8% for 10 years. For investment made in FY2021 (April 1, 2020 to March 31, 2020), the PMVVY shall offer 7.4% per annum. SCSS provides a slightly higher return at the moment (8.3% p.a.). SCSS is also offering 7.4% p.a. currently (May 25, 2020).

As the Govt. press release dated May 20, 2020, the interest rate of PMVVY will be in line with the interest rate of SCSS. Hence, there is little point in comparing the interest rates of SCSS and PMVVY now. The only difference(with respect to interest rates) will be on the account of interest reset frequency. SCSS interest rate can change every quarter. PMVVY interest rate will change every year.

With SCSS, you can lock in the interest rate for only 5 years.  If you want to extend or renew, you will get the prevailing rate. SCSS interest rate is announced by Ministry of Finance every quarter. With PMVYY, you can lock in the interest rate for 10 years.

With SCSS, you get the tax benefit under Section 80C of the Income Tax Act.  No tax benefit under PMVVY.

With SCSS, you can invest Rs 15 lacs each in your and your spouse’s name i.e. Rs 30 lacs in total.

On the other hand, with PMVVY, you can invest a maximum of Rs 7.5 lacs for the entire family.

In PMVVY too, you can invest Rs 15 lacs each under your and your spouse’s name. Therefore, as a family, you can invest up to Rs 30 lacs in PMVVY.  Of course, both you and your spouse need to be senior citizens.

With SCSS, payment frequency is quarterly. With PMVVY, the payment frequency can even be monthly.

Income from both the schemes will be taxed at your marginal income tax rate.

With SCSS, you can exit (prematurely) quite easily as compared to PMVVY.

SCSS vs PMVVY Pradhan Mantri Vaya Vandana Yojana Senior Citizens Savings Scheme pmvvy 2020 pmvvy vs scss vs pmvvy

In my opinion, SCSS is a better product due to its higher interest rate and better liquidity. However, I can see PMVVY can be more useful in many cases.

Between SCSS and PMVVY, it is difficult to pick one over another. The interest rate is likely to be the same for both the products (albeit with a lag). SCSS provides better flexibility. However, with PMVVY, you can lock-in the rate of interest for the long term. 

PersonalFinancePlan Take

Positives of PMVVY

PMVVY is a simple and easy to understand product. You get what you see.

If you compare with a bank fixed deposit, the scheme offers a much better interest rate than a plain vanilla fixed deposit (at the moment).

You can lock in the interest rate for 10 years. Well, this can be a double-edged sword.

Premium (purchase price) does not depend on age. Good for those who are in their 60s. For those in early 60s, the annuity rates, even for without return of purchase price variant, are likely to be lower than PMVVY interest rate. 

Hence, it might make sense for such investors to pick up PMVVY in their early 60s. After 10 years, they can consider an annuity plan without return of purchase price to generate a good level of income.

In my opinion, this is a decent option at present for those who want to keep things simple.

Negatives of PMVVY

Do note PMVVY is not an annuity product. Therefore, you do not lock in the interest rate for life. You do it only for 10 years. After 10 years, if the scheme is still on offer, the interest rate offered may be way different than 8% p.a 7.4% p.a..

The investment is capped at Rs 7.5 lacs for the entire family. There is maximum investment limit of Rs 15 lacs per senior citizen. Therefore, the quantum of income from this scheme is capped.

You cannot access money except in case of serious illnesses. There is a facility of loan after 3 years but I wouldn’t go that far. I don’t like to pay to access my own money.

Income is taxable. Effective returns can be low for investors in the highest income tax bracket.

You need to see applicability

For instance, someone who falls in the 30% tax bracket, the effective return is only 5.6% per annum. If this person is willing to take some risk, a Systematic withdrawal plan (SWP) from a good quality debt fund (and not equity fund) may be a good choice (more tax efficient).

Do note SWP can be a bit complex. It is not difficult to select a wrong fund for setting up a SWP. Recently, SBI MF deliberately tried to mislead customers into selecting a wrong fund for setting up a SWP. You need to select the right debt mutual fund for STP.

(Update: May 25, 2020): Debt mutual funds have made investors anxious recently. Hence, you need to consider your risk appetite too before going the STP route from debt mutual funds. If you can appreciate or digest the risk, stick with simpler products such as FDs, PMVVY, RBI Savings Bonds and SCSS.

If you are quite old, say 75 or above, you may get a much better income with an immediate annuity plan.

However, PMVVY may be a good idea for those investors who fall in the lower income tax bracket (and who are in their early 60s) and are looking for a simple product.

Remember that PMVVY is an income product. Do not invest in this product unless you need regular income.

The post was first published on July 26, 2017 and has been updated since.

211 thoughts on “All you need to know about Pradhan Mantri Vaya Vandana Yojana (PMVVY)”

  1. Saravana Bavan

    Dear Deep – Thanks for highlighting about the PMVVY Scheme and it’s excellent. I have one question regarding opening both the SCSS and PMVVY Scheme. My Mother has already enrolled in SCSS Scheme with a Max. of 15 lakhs. Is she eligible to enroll in PMVVY too with a Max. of 7.5 lakhs. Is there any restriction that one cannot enroll in both the schemes?

    By the way, I am a fan of all your writings and I always share your blog in Facebook whenever I read any article. Keep up your good work in providing great complimentary service to all of our Indian Netizens!!

    Thanks
    Bavan

    1. Deepesh Raghaw

      Thanks Bavan!!!
      Appreciation from readers like you keeps this blog going.
      Coming to the question, SCSS and PMVVY are not either-or.
      Therefore, your mother can invest in both. However, you need to look at suitability.

      1. Saravana Bava

        Dear Deep – Thanks for updating this invaluable information and no doubt you are the best personal financial advisory in India that too offering free service to all Indians who are tremendously benefited!! May God Bless you for your invaluable Service!!

        With this update, a family of husband and wife and invest a Maximum of Rs. 60 Lakhs in both SCSS and PMVVY Schemes where they can get a monthly return of Approx. 7.4% per annum which means a Monthly Income of close to Rs. 35000 can be generated without hurting the Principal which is 100% SAFE too!! Excellent Deal and I am not seeing even 1 Market-return product which can generate 7.4% Monthly consistently that too with a lot of risk!!

        THANK YOU for such a Wonderful Post as RETIREES will find it extremely useful to generate a monthly income of Rs. 35000 which is sufficient for their monthly living expenses provided they have their own home which most have!!

  2. N R Ramkrishnan

    Hi Deepesh
    Very nice and informative article.I am 67 years old and staying in canada as NRI. I found one information is missing. Can NRI invest in any of these schemes?

    Thanks and regards

    N R Ramkrishnan

    1. Thank you sir.
      I tried to search this aspect. Could not find a conclusive No or Yes anywhere.
      LIC website also talks about citizen (and not resident). I must say, typically such schemes are reserved for residents.
      Point to note is that interest on NRE FD is exempt anyways for non-resident (unless you stay in a country where foreign income is taxed).
      This, to quite an extent, does away with need for such schemes.

          1. Thanks Mr. Deepesh for the crisp and clear analysis on PMVVY.
            Thanks Mr. Bableesh on the clarification that it is not for NRI.

            I am an NRI working in Dubai, but my mother is a Resident 67 years of age and all alone. I wish to put INR 15 Lacs in this scheme in my mother’s name so that she can earn an interest of 7.4% continuously for 10 yrs.

            My query is—
            1) Will there be any implications from Income Tax point of view if I an NRI daughter transfer money from my NRE account to my mothers local account and put it in this scheme.
            2) Is TDS applicable on the interest income from the PMVVY scheme. My mother has no income and does not file income tax. I wish she could get the entire 7.4% in her account.
            3) Can I make myself the nominee so that I can get the INR 15 lacs back if God forbid anything happens to my mother.

            Your advice will be much appreciated.

            Thanks & Regards,
            Hiya

          2. Hi Hiya,
            Thanks!!!
            1. No tax implication on the transfer of money from daughter (whether NRI or resident) to mother.
            2. No TDS applicable.
            3. Yes, you can be the nominee.

        1. Dear Sir,
          When it comes to Corporate FDs, I wouldn’t go beyond HDFC.
          Return of capital is more important than return on capital.

  3. Mahesh Chandro Samant

    Very good investment with out any risk .For the benefit to the old age persons the income (pension) may also be exempted.The interest rate is less than postal senior citizens savings scheme.

  4. Hi Deepesh

    In both of these schemes, can I invest for my parents? Basically I want to know if I can issue a cheque against these schemes for investing in the name of my father and mother?

  5. Purushottam Pathak

    Dear Sir,
    The article is exchaustive enough to arrive at a decision .
    It is said that the income is taxable ,my point is whether the TDS is applied or one has to show the income in Tax return. Unlike form 16A, incase of bank deposits,what is the proof of income in PMVVY .
    Regrds,
    Purushottam Pathak.

    1. As I understand, TDS won’t be applicable.
      You don’t need proof of income while filing taxes. You just need to report income.

  6. Hi Deepesh,
    Few years ago there was a similar scheme, Varshtha Bima Pension Yojna. I invested in that. Am I eligible to invest in PMVVY too.

        1. Dear Sir,
          In PMVVY terms, there is no such mention.
          Therefore, in my opinion, there is no such restriction.
          The restriction is only on maxiumum pension under PMVVY.

  7. Dr, Sasibhushana Sarma Vedantam

    Dear Deepesh,

    I have a query to you regarding PMVVY. It is called as a family plan, i.e. per family the limit of investment is Rs.7.5lac.

    I have invested in Pradhan Mantri Varishta Bima Yojana just before 14th August 2015, when I became senior citizen just a few days back. The amount invested was Rs.6,66,666 for which I am getting Rs.5,000/- per month from LIC of India.
    Now my wife became senior citizen. Considering the previous information provided, what is the amount I can invest in my wife’s name (will it be Rs.7.5lacs or will it be limited only to Rs.83,334/-, being the balance amount remaining out of Rs.7.5lacs)
    Please clarify.

    Thanking you,

    1. Dear Sir,
      As I see, the family limit is only for investment in PMVVY.
      Nothing to do with your investment in Varishtha Bima Yojana.
      So, your wife can apply for full 7.5 lacs.

  8. Dr, Sasibhushana Sarma Vedantam

    Dear Deepesh,

    I have a query to you regarding PMVVY. It is called as a family plan, i.e. per family the limit of investment is Rs.7.5lac.

    I have invested in Pradhan Mantri Varishta Bima Yojana just before 14th August 2015, when I became senior citizen just a few days back. The amount invested was Rs.6,66,666 for which I am getting Rs.5,000/- per month from LIC of India.
    Now my wife became senior citizen. Considering the previous information provided, what is the amount I can invest in my wife’s name (will it be Rs.7.5lacs or will it be limited only to Rs.83,334/-, being the balance amount remaining out of Rs.7.5lacs)
    Please clarify.

    Thanking you,

    Please reply.

  9. Dear Sir,

    the interest income generated through PMVVY is taxable in the hand of person receiving the interest income. Please clarify.

  10. Bro i work in california sent some money to my parents for help now income tax have sent a notice demanding for Rs 12000 . what should i do was Pradhan Mantri Vaya Vandana Yojana (PMVVY) SBI AC

    i didnt send the money at once monthly like you as son supports his parents . im totally nob at this

    1. Hi Abhi,
      Have they sent the notice to you or to your parents?
      Tax is charged on the income, not on the money transferred to parents.

      1. I want to know whether there is any Pension Plan in LIC at present like that old VARISTHA PENSION BIMA YOJANA– in which Income Tax Benefit is available u/s 80 CCC for the lump sum amount paid once and it will fetch me monthly Annuity @ 8% p.a. not taxable. Thanks. KARTHIKN.

        1. Dear Sir,
          8% at present may be difficult.
          Did you check the rates for you in LIC Jeevan Akshay?
          Annuity income is always taxable.

  11. Hello Deepesh,
    Thank you for detailing the PMVVY scheme. I have a query….. My father (71 years) had recently invested in this plan in two installments of Rs. 3 lakh each. Can he invest another installment of Rs. 1,22,982. Pl highlight related T&Cs, if any. Thank you.
    Best Regards,
    Radhakrishna

  12. Kashmira Pagdiwalla

    Hello Deepesh,
    Thx for all the information. My question is can a green card holder in US be entitled to this scheme and if so, does he get taxed on the interest and invested amount in the USA ?
    Thank you
    Kashmira

    1. Dear Madam,
      Typically, such schemes are restricted to residents. However, LIC website mentions that citizens can invest. Technically, since you are still an Indian Citizen, you should be allowed to invest. However, you never know.
      The income is taxed both in India and US.

  13. Dilip Mukherjee

    Me & my wife already invested in scss 15lac each .. instead of investing in PMVVY will it not be better to invest 7’5lac now further in MF Debt fund .our income is within taxable limit , if yes which debt fund can give better return than PMVVY , thank you Dilip Mukherjee

    1. Dear Sir,
      That is an option.
      Difficult for me to comment.
      Currently, PMVVY gives 8%, which is quite decent in current times. Since you don’t have to pay tax, it makes for a good choice. Can’t comment about the future.
      Btw, do you need regular income from this investment?

    1. Yes, he can.
      In SCSS, he can invest a maximum of Rs 15 lacs.
      In PMVVY, he can now invest a maximum of Rs 15 lacs (up from Rs 7.5 lacs, as mentioned in the Budget speech).
      At his age, you can explore annuities too (if the only intent is to generate regular income). The rate of interest can be high.

  14. I am single and a senior citizen. Can i take more than one policy in my name itself within the limit of 15 lacs(budget 2018) under different payment modes ie, One under monthly and another under annually. are there any restrictions on the number of policies one individual can take in his/her name.

    1. Dear Sir,
      Yes, as I understand, you can purchase multiple plans.
      The limit of Rs 15 lacs (as announced in the budget speech) may take some time to be operationally implemented.

  15. Dear Deepesh,
    My wife is senior citizen and a house wife.
    She is not a tax payer.

    Out of the savings she has,she wants to invest in PMVVY.
    Please guide,as to whether,there will be any deductions from her pension or from the amount receivable after 10 years.

    What documents would be needed at the time of getting the policy.as far as tax implication is concerned.

    Kindly guide early and oblige
    V A Dixit

    1. Dear Sir,
      If the savings are hers (through pin money or otherwise), she can invest in PMVVY.
      If you are the source of money, even then she can invest but the interest income will be clubbed with yours and taxed accordingly.
      There is no tax benefit on investment in PMVVY.
      Post- budget 2018, the maximum investment limit has been enhanced to Rs 15 lacs.

  16. Dear Dipeesh ji
    Sorry to trouble you again.
    Understood that the scheme is not tax free
    However,will she be taxed even when she is not in the tax bracket and a tax payer.

    Secondly,guide as to how the tax is levied.
    Will it be deducted from the monthly pension or at the end from the invested amount and at which rate
    Regards
    V A Dixit

    1. Dear Sir,
      If it is her money, she won’t be taxed.
      However, if it is your money and simply invested in her name, then income from such investment will be clubbed with your income.

  17. Hello Sir,
    I have couple of questions –
    1. Can a son take this policy PMVVY in their parents name so that they can secure their old age ? for say 7.5 lakhs.
    2. I understand that the interest is taxable , but want to confirm that the principal i.e. 7.5 lakh which will be returned after 10 years will be given fully back with no taxes on it ?
    Please confirm , thank you for the help.

    1. Hi Mohit,
      Only your parents can invest. You can gift them the money and they can purchase.
      Only interest is taxable. Principal is not taxable.

      1. Sir
        I invested Rs15 lakh day before with monthly pension option. Today I want to change the option to annual /yearly basis. Can we do the change after issuance of policy.

      2. Sarbjit Singh

        Deepesh ji my issue is a bit complicated. My mother aged 85 y gave me money, I aged 65 y gave to my son. He decided to give to his mother ie my wife 60 y by way of investment I’m PMVVY direct from his account. Will it be acceptable. Money already transferred on line to LIC.

  18. Dear Mr Deepesh Raghaw,. Thanks for your detailed inputs about PMVVY PLAN OF LIC.
    U HV MENTIONED that Sec 80c exemption is Not Applicable to this Plan. R U sure Sir? Can u pls recheck and clarify?

    Thanks / Regds.
    C V Vasudevan

      1. Madhavan Nair

        But is it not eligible for tax exemption under section 80CCC, under the total overall ceiling?

        The closure proceeds are taxable in the year of receipt, being reckoned as the income for that year. That is a definite dis-incentive. What is the logic behind this, I dont understand, since the original investment comes out of tax-paid money.

        Regards

        1. Deepesh Raghaw

          No tax benefit for investment.
          It is about the target segment.
          As I see, from the Government’s perspective, it is not meant for 20% or 30% tax bracket senior citizens. Of course, it does not restrict them from subscribing to the scheme.
          However, it is not unfair to expect similar tax treatments for PMVVY and SCSS.

  19. Hello sir,

    I needed some clarifications, regarding PMVVY scheme.

    What happens if the pension limit of Rs. 60,000 p.a. exceeds with ₹ 500 or 600 . ( i.e., 60500 or 60550).

    Your reply will be very helpful.

    1. Deepesh Raghaw

      Dear Madam,
      Given the ceiling on investment, your pension wouldn’t breach 60,000 per annum.
      Btw, the maximum investment in PMVVY has been enhanced to Rs 15 lacs. This will automatically increase maximum pension to Rs 1.2 lacs per annum.

  20. G.P.Chatterjee

    I want to invest in purchasing PMVVY scheme. I want to issue cheque for this. Please advice me in whose name the cheque should be written?

  21. Pranav Kumar Chakravorty

    If the effective rate of interest is 8.30% does it mean that the amount of interest will be slightly higher than Rs.120000 or 60000 or 30000 on investment of Rs.1500000 if I take the interest annually or half yearly or even quarterly? If not why do you say that the effective rate is 8.30%? Kindly clarify.

    1. Deepesh Raghaw

      Dear Sir,
      Maximum pension is capped. Just that you will need to invest less for the same level of income.

  22. Anubhav kumar kanojia

    My mother getting regular pension around 27ooo,I want to know how should I invest 1500000 into scss,pmvvy .

    1. For SCSS, you will have to go to a bank branch.
      For PMVVY, visit the nearest LIC branch. Alternatively, you can also purchase the plan online.

  23. Dear Deepesh,

    My mother invested 7.5 lakhs in pmvvy last year. Can she invest more this year? I heard from sbi staff that we can invest up to Rs.15 lakhs in scss per year. Similarly is the limit in pmvvy per year. if it is possible to invest more in pmvvy, we will go for it. or else we will go for scss. Please let me know.

    Thanks,
    Sriram.

    1. Dear Sriram,
      The maximum investment was enhanced from Rs 7.5 lacs to Rs 15 lacs in Budget 2018.
      I am not sure if LIC is accepting applications for an investment exceeding Rs 7.5 lacs yet.
      Please check with the nearest LIC branch.
      Additionally, the investment limit is not per year. It is a cap on cumulative investment.

  24. Dear Sir, I heard PM VVY is going to close from 3 May 18
    Is it true. I am planning to invest in it. Email me urgently please.

    Sitesh Ray

  25. Sir,
    I have obtained SCSS in Feb.2018 . SCSS scheme is legible under IT under section 80 C in next financial year . if not which scheme more suitable for obtaining benefit under section 80 C benefit for senior citizen.
    Thanks

    1. Deepesh Raghaw

      Dear Sir,
      Investment in SCSS is eligible for tax benefit under Section 80C.
      Please understand your total investment in SCSS (at any point in time) cannot exceed Rs 15 lacs.

  26. Hi Deepesh,

    Good article giving all details, however need clarification to a small query. As per the article, both Husband & wife (senior citizen) can invest 15 Lacs each in PMVVY however you also mentioned that Pension is limited to “This ceiling of pension is for the entire family. The total amount of pension under this policy to a family cannot exceed the maximum pension limits as mentioned above. The family includes self, spouse and dependants”

    Please clarify if the total amount can be invested in PMVVY (for both husband & Wife) is 30 Lacs & if yes, then the pension amount will be 20K PM. Please confirm.

    1. Deepesh Raghaw

      Hi Nitin,
      Thanks for pointing out. I had failed to update that section of the post.
      The limit is per senior citizen (and not per family).

  27. Clarification needed : can an investment be done both in pradhan mantri yogana and senior citizen scheme together ?

  28. Hi Deepesh,

    I know this question has been asked before. Please can you confirm if there is a provision to get exemption on “tax deducted at Source” (TDS) for this scheme by submitting a Form like 15H.

    This is very important for me to make a decision (for my parents) on this scheme, so can you please confirm the above if it can be done or not.

    Also, can you please send me some official links to this information.

    You help is greatly appreciated.

    Thanks,

      1. K Madhavan Nair

        Hi Deepesh,

        Excellent article. Thanks. And also for the lucid follow up comments.

        However I feel that the TDS in the press release that you have pointed out relates to SCSS and not PMVVY. Could you recheck?

        Regards

        Madhavan Nair

        1. Deepesh Raghaw

          Thanks Madhavan!!!
          You are right. I messed up there. The press release clearly talks about TDS pertaining to SCSS.
          It is silent on PMVVY.
          Given the target segment for which it is meant, I believed TDS would not be applicable.
          However, I have not seen any directive exempting PMVVY from TDS. PMVVY is exempt from GST.
          I have read conflicting accounts of TDS on PMVVY.
          Let me check further. Will update when I find concrete information.

          1. Since no tax is deducted at source while crediting the pension (PMVVJ) by NEFT or through Aaadhar based account, every month, quarter, semi- annually or annual as the case may be, Can I presume that I need not submit Form 15 G or H?
            Please clarify.
            Thanks.
            R. Kesavan
            kesavan7777@yahoo.com

          2. Deepesh Raghaw

            Dear Sir,
            Yes, in that case, you shouldn’t be required to submit 15G or H.

  29. Devendra Kaushik

    Please advise to whom 15H form is to be submitted for PMVVY and if there is a particular type of form

  30. pramod tiwari

    The finance minister has proposed to extend the Pradhanmantri Vaya Vandana Yojana (PMVVY) scheme till March, 2020. It has also proposed to increase the current investment limit t o Rs 15 lakh from the existing limit of Rs 7.5 lakh per senior citizen.
    The PMVVY is a pension scheme subsidised by the Government of India. The amount of investment made in the scheme is called the ‘purchase price’. PMVVY was launched on May 4, 2017, and was initially meant to be available for one year ..
    Depending on the pension option (monthly, quarterly, yearly), the pension begins as an arrear, i.e., starts from the end of the chosen period
    The scheme is for a period of 10 years and is based on the amount of investment. It carries a fixed and assured pension (return) as mentioned in the policy document till the maturity of the scheme.

    Respected sir,

  31. I have invested 10 lacs in pmvvy.can i get deduction of that in income tax? your help will be much appreciated .Thanks in advance

  32. Hi, Deepesh, As my father is 78 years old and mother is 72 years as my father can be deposited by cash or cheque which one is to apply for cash or cheque and is it applicable for father each for 7:5 lakhs and mother for 7:5 lakhs and get seperate pension scheme…. Which is eligible , not full amount to 15 lakhs per person….. Kindly suggest me which helpful to us for my parents….

  33. Dear Deepesh

    Thank you very much for the detailed note on PMVVY.

    Some state Government Treasuries accepts FD @ 9% per annum (for senior citizens). So the monthly income may be higher than the PMVVY. Here the question is which one is the safer option. Is it state government treasury or PMVVY.

    Please advise.

    With regards

    P K Haridas

    1. Deepesh Raghaw

      Dear Sir,
      Thank you.
      If I may ask, which state Governments are issuing bonds at 9%? How do you invest in such bonds?
      If you are worried about the safety of your capital, I would not expect state governments to default.

  34. Dear Deepesh

    PMVVY – Kindly mention whether we get pension after one month of deposit
    (if it is a monthly option).

    With regards

    P K Haridas

  35. Can i gift money to my parents?
    my parents both are not working no income.still they can join this scheme by using my money ?
    which scheme is better scss or pmvvy ?
    can i take now 4.5 lacks pmvvy(3 k /month) later can i add /take additional 3 lacs one (2k /month) ?

    1. Deepesh Raghaw

      Once you gift money to your parents, it is their money.
      They can use the money as they wish.
      Yes, you can put money in parts in PMVVY.

  36. N G RAMACHANDRA RAO

    Please read Press Information Bureau (Govt.of India) press release dtd.5th January 2018 quoting the statement made by Mr.Shiv Charan Shukla,Minister of State for Finance in the Lok Sabha.
    According to the said statement,investment in PMVVY qualifies for tax benefit under Sec.80C of Income Tax Act,1961.
    Kindly let me have your observation on this.

  37. Hi Deepesh,

    Whether the amount invested under PMVVY can be taken as deduction under 80C (Limited to 150000/-). I know that the interest received is taxable in my hands. PLs clarify.

  38. Hi Deepesh

    I had selected Annual mode for pension disbursement. If the person will die in between the two pension disbursement period then pensioner will get the proportionately pension of interim period or not?

  39. A REQUEST for ADVICE. Dear Sir , there are two persons ( 60/61 years old ), needing some help in my village. i wish to give Rs 1.5 lac to each thru PMVVY ; so that each gets Rs 1000 every month. There is a PNB branch in my village. How do i go about it. Please Advise.

  40. Hi Deepesh , suppose I invested max limit in PMVVY and eligible for 1.2 lac annual pension , so at year end LIC will give me 1.2 lac or some less amount after deducting tax ?

  41. i invested RS 7.22 lacs on 28 august 2017 but till date interest accrued annually RS 60000 is not credited in my account which is due on 27,8 2018 please find reason of delayand inform if possible

    1. As I understand, the credit will happen between 5th and 10th.
      Check with your branch, if you don’t get money by 10th.

  42. Sir I want to know if TDS is deducted or not on pension in PMVVY.
    And my second question is that is it necessary to have Savings account of any Public Sector Bank to receive pension payment or account of Private sector bank would also suffice??

  43. Sir,
    I ‘ve invested RS 750000 in pmvvy of Lic & getting RS. 5000 / month as a pension from Lic . Now it is my question to u . When I’ll submit my return in FY 2018-19 then will I calculate tax RS 750000 & also RS 60,000 in pension both . Please clarify my doubt.
    Debasis Biswas
    20/09/2018

  44. Dear Sir

    Very informative article thanks, my relative has invested in this last year, he has purchased this online. Now he wants to top up, can he do this also online. I tried digging around in the lic website but was unable to find anything. Or should he visit the LIC branch only? Any help?

    Balaji

  45. Dear Deepesh,
    A to the point article covering finer aspects of scheme.
    With recent SC ruling on Aadhar, is Aadhar mandatory now for investing in it.
    Kindly clarify.
    Thanks.
    Mahesh

  46. Dear Sir,

    Thanks a ton for the exhaustive information you have shared.
    I am planning to buy a PMVVY for my mother who is 63 years old and has been a housewife her entire life.

    My questions are-

    1. Is she eligible for registering herself/buying a PMVVY?
    2. Will her annual income of Rs. 1.20 lacs be taxable? If yes, by how much ?

    1. Hi Tathagata,
      1. Yes, she can open PMVVY account (even when she has been a housewife).
      2. If Rs 1.2 lacs is her only source of income, she won’t have to pay any tax. income upto Rs 3 lacs exempt for her.

  47. Hi Deepesh,

    I read all the posts but still want to clarify a small question… husband & wife (both senior citizens) can invest individualy 15 lacs in PMVVY & 15 lacs in SCSS, means a total of 60 lakha can be invested in both schemes for both husband & wife.

    Is my understanding correct…

    Thanks

  48. Shivsharan Kaddargi

    Can my wife gift ₹1500000/- to me in cash so that I can invest in pmvvy. Does she need to pay any gift tax?

    1. No gift tax for transfer between husband and wife.
      The income from such investment will be clubbed with your income and taxed accordingly.

  49. Hi,

    My father is a senior citizen. He has already invested 15 Lakhs in PMVVY. Now, he wants to invest 15 lakhs in SCSS in a bank. But, the bank manager is denying as he has already inevsted 15 Lakhs through PMVVY.

    Could you please let me know if there is any such rule?

  50. Ravindren Narayana Rao

    Dear Deepeshji,
    I have a question
    The pension earned from the PMVVY Scheme is to be classified under which source of income in the income tax returns? Should it be included under Income from Salaries, since the word Pension is used in the scheme/policy and not “interest”. Await your kinarayan d reply.

    Ravindren N

  51. Dear Mr. Deep

    My mother has already invested Rs. 722892 for annual payout of Rs. 60000/-. Now can she avail another policy for the same amount of Rs. 722892 (max. limit for annual payout).

    Regards
    Balaji

  52. Dear Sir,
    In one of your answers to a query raised by a gentleman, you have answered that income from PMVVJ scheme be mentioned under the heading “income from other sources”.
    But I think that such income should be mentioned under section 80 CCC. (Income from pension fund from LIC).
    Can you please check up and clarify?
    Thanks.

    1. Deepesh Raghaw

      Dear Sir,
      If under the ITR, there is a specific section for this, you mention the income there.
      I talked about a broader classification.

  53. There is lot of confusion on applicability of tax on SCSS & PMVV Yojana. As per my understanding the tax aspect is as follows:-
    [1] SCSS is subjected to TDS hence investor should submit Form 15H to avoid deduction.. Servicing Bank accepts Form 15H in April every year.
    [2] SCSS qualifies for 80c, whereas PM VVY does not qualify.
    [3] No TDS is applicable on PMVVY hence Form 15H is not required..
    [4] Tax-free status of PPF is best, however, one has to start contribution at the earliest to reap benefit at appropriate time in life. Power of compounding makes it the best investment option for retirement planning.

  54. Lakhvinder Singh Pathnaia

    Sir,
    I have invested an amount into PMVVY scheme during the f.y. 2018-19. I want to know whether this amount is allowed for deduction under section 80c of income tax act. if yes, then what maximum amount allowed for deduction according to income tax act.
    thanks and regards,
    Lakhvinder Sungh Pathania

  55. Amitava Sengupta

    Sir, I liked reading your blog. I request your comment on the following:
    – Since PMVVY is a pension scheme, will it enable me to claim the standard deduction of Rs. 40k ?

    Thanks in advance for your advice. Rgds.

  56. Hello sir,

    My father hardly earned money where to keep due to current situation they r frighten to invest in lic scheme becoz they got new that lic will be shut down soon . And which scheme is more suitable as they need regular income as no other source of income fr them.

  57. Hi Deepesh

    Just wanted to check if pension received under PMVVY will be taxed as other income or as salary since it is received by the person himself and not legal heirs.

    Point I want to check is if standard deduction will. be available as deduction on income received from this source.

    1. Hi Nitin ji,
      As I understand, income from other sources.
      Standard deduction shall not apply to PMVVY.
      Standard deduction applies to regular pension income (from employer).

  58. Mr Deepesh,
    Thank you very much for your excellent articles about PMVVY and SCSS, which are very lucid and easy to understand.
    One small clarification.
    Being myself as a Govt of India pensioner with a decent monthly pension, are there any restrictions for me to invest in both the above schemes with the permissible limit of Rs 15 lakhs in each and get monthly pension?
    Of course I understand that this income is to be added as other income and I have to pay Income Tax
    Regards,

  59. Is there any online discount for enrolling for PMVVY.
    Should one get this from LIC agent ? may be agent might get commission of 1500 for 15lakhs !

  60. RAKESH KUMAR JAIN

    1. Can I subscribe to PMVVY jointly as first holder and wife as joint holder in one policy & and in another policy
    my wife as first holder & myself as joint holder?
    2. Can I subscribe now for 5L & after 6 months for another policy for 5L jointly with my wife (myself as first
    holder & wife as joint holder). Also subscribe now for 5L & after 6 months for 5L my wife as first holder &
    myself as joint holder?
    3. Is joint holding allowed in PMVVY?

  61. Dear Deepesh,
    Thanks for your wonderful explanation one thing I would like to ask:-
    1. If my parents has invested 30 lackhs in PMVVY & 30 lackhs SCSS.. (Total 60 lackhs.)
    Income is from father only but amount has been transferred to mothers account also.
    2. There is no other source of income except this.
    3. As per tax bracket Sr. citizens above 60 years
    No tax:- 3 lackh /annum + 1.5 lackhs (80 C) = 4.5 Lackhs.
    Maximum pension gettable combining both parents
    a)PMVVY:-18500 RS/MONTH,
    b)SCCC- 55500RS/QUARTER= 18500 RS/MONTH.
    TOTAL EARNING IN AN YEAR=4,44000 RS/MONTH..
    SO WILL THERE BE ANY TAX DEDUCTIONS, IF YES HOW MUCH WILL BE THE AMOUNT

    1. Deepesh Raghaw

      Hi Alok,
      There won’t be any tax liability but there can be TDS Deduction.
      You will have to submit Form 15G/15H to avoid TDS.

  62. Gopal Krushna Dangua

    Dear Deepeshji
    Iam a senior citizen and have invested Rs 15 Lakh each in SCSS and PMVVY. Next year when my wife becomes a senior citizen, can she invest Rs 15 Lakh each in SCSS and PMVVY out of my money transferred to her account. She is filing her return separately. what will be the tax liability. Whether she will have to show the interest income on SCSS and PMVVY in her return or i will have to show her interest in my return.
    Please clarify.

    1. Deepesh Raghaw

      Dear Sir,
      Your wife can invest in SCSS and PMMVY once she becomes senior citizen.
      Technically, the income from her account should be clubbed with your income and taxed accordingly (since you are the source of funds). I assume your wife is a homemaker.
      At the same time, there is this concept of Streedhan.
      So, in my opinion, if the amounts are not big, she can show this as her income.
      Suggest you check this with a CA.

  63. Dharmendra Patel

    today my mom senior citizen invest in pmvvy for 10 years
    rate of intrest or pension is same for 10 year
    some agent talk like its change after 1 or 2 year
    my point is if i booked now for 10 year in pmvvy the npension is same for 10 year or not

  64. Respected Sir, Under PMVVY scheme what is Capping Management expense at 0.5% p.a. of funds of scheme for first year and there after 0.3% p.a. for second year onwards for the next 9 years…..so my query is should 0.5%p.a in first year will be charge from my invested amount or not??

  65. Deen bandhu Mundra

    Dear sir
    I have invested rs 666666 i n varishtha bima yojana in 2015 and getting Rs 5000 pm.
    Further I have invested Rs 7.5 lacs in PMVVY sheme in2017 and getting Rs 5000 pm
    Now in the new pmvvy 2020 scheme how much I can invest .My age is 66.
    Deen bandhu Mundra

    1. Dear Sir,
      You can invest a total of 15 lacs in PMVVY.
      You have invested 7.5lacs in PMVVY until now.
      Your investment in Varishtha Bima Yojana is not counted.
      Hence, you can invest a further Rs 7.5 lacs.

  66. Satheesh Kumar M

    Sir, I have 2 questions for you.

    1) My Father is getting Pension of Rs.22,000. Will he be eligible to invest in this scheme
    2) Do we need to produce Life Certificate for the investors every year

    1. Hi Satheesh,
      1. Yes, he can invest in PMVVY.
      2. Yes life certificate is to be produced. I copy the excerpt from policy wordings. The Pensioner shall submit the Life Certificate in the proforma of the Corporation or online “Jeevan Pramaan” as enabled by Corporation in this regard at the time intervals as prescribed from time to time. The pension payments shall be released only on receipt of the Life Certificate.
      I am not sure of the frequency. As I understand, it has to be yearly.

  67. Dear Mr.Deepesh,

    Indeed I am very happy to get my doubts clarified from your replies given on pmvvy,,,scss & varishtha bima yojana.

    Even then taking this opportunity I would like to put forth what I understood. ,

    1. Even if an individual invested 6,66 665/- in vpby and getting 5000/- ,he can invest Rs.15,00 ooo/- in Pmvvy.

    2. Senior citizens husband & wife can invest Rs.15,00,000/- *each* I.e.,Rs.30 ,00,000% on Pmvvy and Rs.15,00,000/- each I.e.,30,00,000/ – in *Scss* Total Rs.60,00,00/- .
    3. varishtha pension bima yojana and pmvvy are not to be clubbed,
    4. Scss & pmvvy , are having different identity
    An individual senior citizen can invest Rs.30,00,000 /- I.e., Rs. 15,00,000/- each.

    Am I correct. Please reply.

    1. Hello Sir

      My mother have a joint account with me. Is there some issue for investment or getting pension as return in joint account? Please inform!

      1. Hi Varun,
        I do not have such deep operational knowledge.
        As I understand, it should be ok if she is the first holder in the account.
        Please check with an LIC agent or visit the nearest LIC branch.

  68. Srinivasan Hariharan

    Dear sir, I find over whelming response to your good work and your tirelessly prompts reply. God bless you for this service you render particularly elderly section of the nation.

    I need your opinion as to, Can both the husband and wife (senior citizens) open just one joint account,in PMVVY, nsread of 2 different account, using their respective source of income and file return separately taking into consideration the proportionate interest received.

    I would appreciate your feedback as I am on the verge of choosing this scheme for a reg income

    Regards Srinivasan

    1. Thanks sir.
      Joint holding is not permitted in PMVVY.
      Even if the two of you were to invest in a single holding account, this (dividing interest income proportionally for ITR) can cause confusion. Please check this with a chartered accountant.
      Better to work with two PMVVY accounts (one for you and one for spouse).

  69. I have invested Rs.600000 in pmvvy in F.Y.2019-20 with a annual pension payment of Rs.49800,@8%,when max.pension limit is 120000 p.a. Now i have invested another Rs.900000 in current F.Y.2020-21 with an annual pension payment of Rs.68940@7.4%.Present max limit for pension is 111000. P.a.My total pension on 1500000 will be 118740 p.a.My pension eligibility will 118740 or 111000?.Pl.guide.

  70. Naresh Kumar Gulati

    Sir I have a query under PMVVY. (1) Is payment of pension by LIC eligible for relief u/s 80TTB? (2) In ITR, where to treat pension, under Head “Income from Salary” or under “Income from Other Sources”, i.e. interest?

  71. Dear Sr,

    Thanks for the exhaustive information. If i buy PMVVY policy online, do i still need to visit a branch. I am seeing that there is a form pre-populated with Aadhar kyc information in which some signature is pending at the end due to online application. Would you happen to know if any last leg needs to be completed by visiting LIC branch or online payment is sufficient.

  72. Provided very needful information for one & all. It is very much helpful for retirees. May god bless you. Thanka a lot.

  73. Dear Sir,
    .My wife is a house wife, a Senior Citizen and is planning to divert her investment in existing FD’s in banks to PMVVY because of higher interest rate being offerred in PMVVY scheme. She has normal income from rental house property and Other income from FD’s. She has been filing ITR’s regularly and getting refund because her total income from all sources after rebate is less than ₹ 500000. I shall be grateful if you would kindly clarify following points regarding taxability of Interest income from PMVVY,

    (1) Whether the interest income of PMVVY can be clubbed with other interest income of FD’s which is exempt to the extent of ₹ 50000/- under Section 80TTB Income Tax Act?

    (2) We propose to make our daughter, a UK citizen , 40 year old, as nominee. In case of her demise whether the Capital sum invested in PMVVY, would be tax free in her hand as the amount would be credited in her NRO account in India?
    Regards,

  74. K. Rangarajan

    Though attractive in terms of interest @ 7.40 percent, no clear instructions about surrender of documents after maturity. During the 10 years one may be far away from the place of purchase of PMVVY. Can the investors submit the bond for redemption at any branch of LIC in India? Similarly should one have to visit the same branch of LIC which issued the policy, for other matters like change of bank details, address or life certificate? Please clarify. Thanks. Rangarajan

  75. Though details about the PMVVY are well explained, one important issue is missing. If you have already taken the PMVVY in the previous year, can you make the investment again in the current year…..??

    1. Deepesh Raghaw

      Yes sir, you can make multiple investments, across financial years.
      The only limit is that you shouldn’t cross 15 lacs cumulative.

  76. My mother(Age: 61) is OCI Holder and living in India. So she can invest in PMVVY.
    Please guide me

  77. Gurmeet Singh

    Hello sir,

    Thank you so much for the wonderful explanation of PMVVY scheme.
    My question is God forbid if the beneficiary passes away before completion of 10 years. I understand the amount (total purchase price) will be given to the nominee. In this case, will that amount be added to the income of the nominee and will the nominee be liable to pay taxes on that as per his/ her income tax slabs.
    Could you please clarify the same.

    Thanks,
    Gurmeet Singh

  78. Jay Prakash Bansal

    I am retired person from Bank. MY wife is housewife. Whether, my wife is also eligible for investing in PMVVY and/or SCSS because she is not having any income, of course, I will invest in her name.

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